How to Improve Your Invoice Factoring Application

December 20, 2017

A positive cash flow is important to running a business of any shape or size – but it is especially critical to a small business. Between the employee salaries, bills, day-to-day operational costs, and tracking down accounts receivables, keeping track of finances can be the most difficult part of running a small to medium business. Securing a loan from top invoice factoring companies can help to relieve some of the financial burden by lending businesses the money they need to get them through the month by turning your customer invoices into immediate cash.

The first step in getting this capital is completing a strong application with the factoring company. The good news is that the application process is fairly simple to complete and doesn’t require lengthy paperwork like a traditional bank loan. To ensure that your application does not get rejected, review the following factors that make up a strong application that is sure to impress any factoring company.

Be Easily Found Online

Not having a website or social media presence is not only a missed opportunity for new business, but it also makes your company seem less credible. Fortunately, there are a number of ways that you can makes your online presence known. If you don’t have a website, that’s where you should begin. There are so many tools available to quickly and easily make a website – even if you’re not technically savvy.

If you already have a website, you’ll want to ensure that your content it updated regularly and have a good SEO strategy in place so search engines like Google can easily find your site. Being active on social media channels like Facebook and Twitter or keeping up to date on your blog will also improve your business legitimacy. Lastly, having positive customer reviews, referrals, and backlinks on other websites like Facebooks, Yelp, YellowPages, and Trip Advisor is perhaps one of the easiest ways to prove credibility.

Become a Verified Business Entity

Your application may look less favorable to the factoring company if your business is a sole proprietorship. By becoming an LLC or a corporation, you’re proving the legitimacy of your business and dedication on your part, making you a low risk applicant. The process to go from sole proprietorship to LLC or corporation is fairly easy and every state has its own rules and procedures. You can start the process by going to your state's Secretary of State website or office to fill out the proper forms and review the rules and regulations for your state.

Improve Your Credit Score

While some companies, like Fundbox​, have no minimum credit score requirements, some companies such as BlueVine​do have credit score requirements, so your business and your personal credit score may play a factor in your application getting approved or not. If you’re not sure what your personal credit score is, there are a lot of tools that you can avail of to find out. Have a look at Credit Karma. If you think that your credit needs a boost, get in touch with a credit repair company to develop a plan that will get you on the right track to a healthy credit score. Improving business credit is a little different from your personal credit. The easiest thing you can do to improve your business’s credit is to have multiple business accounts and credit cards and to make early payments on those accounts.

Maintain Good Record Keeping

This list item should go without saying. No matter what type of business you’re in, keeping excellent, up to date documentation and records of your contracts, customer information, account receivables and aging reports should be a part of your day-to-day operations. You can be certain that factoring companies will complete a thorough evaluation of your company, customers, and documentation, so whatever you believe will support your application and speed up the process – have it ready for review. Keep in mind that the document requirements for any factoring company are going to vary depending on your state and their requirements.

Use Your Biggest Clients

To impress the factoring company, it’s advisable to put forward the your largest, most profitable customer invoices first because the larger the customer, the greater the odds that you’ll get paid. You’ll want to ensure the selected customers are large accounts, have good credit, and a history of paying on time. The more reliable your customers appear bodes well for your business’s reputation and allows you to leverage their creditworthiness.

Be Aligned with Your Customers

When you put forward a customer invoice to a factoring company with the intent of financing it, it’s important to understand that it’s not going to care about any planned or future work you have lined up with that customer. It will only accept an invoice that has already been issued for agreed upon work. In order to avoid the factoring company rejecting your application, you must be aligned with your customer in terms of the work associated with the proposed invoice has been completed and when payment is due. Factoring companies also take into consideration the relationship that you have fostered with your customer. It’s not enough that the customer is a reputable one, they must also enjoy and want to keep doing business with you.

Bottom Line

If you’re a small business struggling to maintain positive cash flow right now, invoice factoring is a quick and safe way to receive cash without having to deal with lengthy loan application that can take days for you to receive your funds. Keep in mind that every factoring company has its own requirements for application approval. However, this article should give you a good idea of what makes up a strong application that should get you approved by almost any factoring company. To find the right funding solution for your business needs, do your homework first. Take the time to read reviews of top online invoice factoring lenders to determine what is the right option for your current financial needs.

Top10 Best Staff

The Top10 Business Loans staff is comprised of professionals with a vast knowledge across the world of business loans and companies that offer them. Members of our international team have extensive first-hand online experience in utilizing strategies for supporting businesses that are searching for a loan.

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